flume bloomberg world headquarters in new york, this is bottom line. what is next for iraq? we have an exclusive bloomberg interview from towns, france. france.s, to our viewers here in the united states and around the world, welcome peewee of full coverage of the stocks and stories making headlines today.

michael mckee looks at the north carolina jobless experiment. we look to washington, where a cease-fire is expected to start by the end of the day. in the ukraine. on thes unilaterally government side., separatist are not abiding by this. massing troops to the highest level since the criteria crimeaion -- annexation. the reports about food and pulling back tryin -- putin pulling back troops has reversed.

it would be surprised if the cease-fire last a night let alone a week. significant are these new sanctions? are sevenway these individuals in ukraine who were added to the list of those whose assets have been frozen by the u.s. and who are banned from traveling to the u.s. the third two prominent s, and the self-declared chairman of the parliament of the.net people's nesk people'so republic. the timing of these are significant, because this comes on the day when he announces his unilateral cease-fire. the message is carrot and stick. sanctions are not over, but we are a link to do this

cease-fire. >> the other foreign-policy crisis that is preoccupying the white house is iraq. are we getting right back into the war? >> i do not think so. the u.s. is sending up to 300 special forces, they could be arriving as early as saturday. is a slippery slope, dating back to vietnam which again with 400 u.s. advisers. we have already been involved in a war that cost us $1 trillion, and 4000 u.s. lives, and that started back in 2003. i do not think we will see a repeat of that. this president has been committed to pulling troops out, not two-putting combat troops back on the ground. what we're really talking about is protecting direct u.s. interest like the embassy.

oil and trying to prevent iraq from spiraling completely out of control. >> the past couple of days the former bryce president dick cheney -- a vice president to cheney has been blaming obama for the best this week -- mess this week. >> we saw that wall street editorial that cheney did with his daughter. mention that it was his own president that actually signed an agreement to bring out the forces by a date, and iraqi government did not want to give us an immunity green met. agreement. we are seeing the architects of war coming back and now

trying to turn the blame on the president. there is some back to the future here as well. >> thank you. more on iraq on charlie rose. the joint chiefs of staff from 2001-2005 will be his guest. that is tonight at 8:00 p.m. and 10:00 p.m. the most creative minds in advertising and marketing gathered at the cannes creativity festival this week. andhanie ruhle was there, he spoke to the aol ceo. >> major industries like wall street are getting changed by data and machines coming in to automate what a lot of human jobs have been doing.

is really separating industry into two main strategy areas. one is to let machines do everything that they can do, and that is a very powerful change in a very scalable change globally for advertising. the second, which i'm really is findingbout, the most creative talent in the world to find the single best ideas and scale what i think to globaltionalistic type ideas around advertising. and that is a really powerful combination of machines and superhuman talent. >> while content is king, everyone wants to create content. is there an appetite for all of this genius? earlywere really i investors in content. content ist basically the most powerful thing that get put through gets put- yet but through

through piping. the average consumer is consuming more confident now than they were 51 years ago to, 10 years ago. i think people will be more entertained by it, and enjoyed. >> what does prog rammatic tv mean to you? >> it is the program by which advertising, and it is likely in 10 years and will be a majority from a machine automation process. programmatic tv is the targeting and distribution of ads using machines on television. television is very famous for ofir upfront and digital way showing their shows, and people can pre-book campaigns.

i think a lot of that will be done a real time. the system isk being gained a little bit -- little bit, or do you believe the hype? >> data is not what is important, it is the insights of the data. in many cases that use the data .nd everything else they do with one of the top three advertisers in the world, and we have this conversation, and i said what do you think the difference in data is on your ad program? they think it is double. and get double the response double the efficiency from using data against their ads. if you take a major corporation like that that drives global

change in advertising and global change in markets, and they are benefits out the of the data, the corporation is not going to go backwards. >> why have they found to their group post aol? atch was a great idea to put local platforms in every community in the united states. i think the group of turning a around was better served by putting patch outside the company. patch just turned profitable. the group that is running dit is doing a fantastic job. >> is it unfair that the media or the market does not allow companies enough leeway to have their second chapter? they're so excited about companies with no profitability with ideas you never heard of gave.

to get intowait those, and do not give you any money. >> we are the best all you out oute, we are -- value there, we are a fifth of our bracketacket size -- size. we have a great group of talent, and we are starting to build something that is not re plicable. >> we will have more throughout the day from stephanie's exclusive interviews from the cannes creative festival. creator of veep. california'suthern

economy is rebounding. but they cannot expect the return of prerecession services just yet. ♪

>> welcome back. the rebound of southern california's economy is expected to boost los angeles as revenue by a major percent this year. on track to spend seven hundred $11 million more than it takes in over the next four years. $711 million more than it takes in over the next four years. moreus why l.a. is issuing of the short turned up than ever short term debt than ever

before. >> we get a discount when we pay our pension payments of over 35 million dollars. it makes a lot of good sense for the city. the amount we borrow for cash is actually reducing, showing that our reserves are growing. >> does los angeles need pension reforms like the ones that are being proposed in phoenix? >> we have actually adopted pension reforms. healthes pay nothing for care. workians now have to to age 65. controlling growth of our s, but they are still growing. >> wasn't a hard sell, bu-- help us hard sell, or to help you or else there will

not be anything left? >> we were able to reach consensus with our unions. some of it is still challenged, but we believe we will prevail. our current employees are titled to the benefits they signed up for. los angeles has a structural deficit, you said that back in april when you were budgeta look at the proposal. what measures does the city need to take to eliminate that? >> we have come a long way. we have were casted much larger deficits not that long ago. we need to start reducing the gap them about control spending. 5.5budget has grown by percent, but our workforce has remained flat. we have outgrown the workforce in the last five years because we do not have the revenue for it. workers compensation and revenue

grows faster than our growth. our of that mean that revenues -- >> in the state capital help? >> we are hoping that sacramento leaves us alone. greg why do you say that? greg they spent the last again try to find way to balance their own vegan on the backs of cities. that does notthat affect our cities. banks arereet charging the city $200 million in fees for product such as interest rate swaps. a position onhave this issue? do you think that wall street banks are taking advantage of viewing? >> the swaps came in in a specific context. we had to find alternatives

during the crash. we made the best decision at the time. so it would not cost the city more. theome of the unions want city to dial back your relationships with the bank. they think that you're too cozy with them. how do you respond to that? >> we are the second-largest city in the country, we borrow billions of dollars each year. we no cannot go to the local credit union for that. we have a relationship with the financial institutions to provide the level of services we do. >> what titles want to be the home -- los angeles wants to be the home of george lucas's art museum. what would that mean in terms of revenue, we cannot imagine any other place to have this museum. capitalhe entertainment of the universe, it does belong in los angeles. we have a record number of area fromoming to the

all over the world. it would make sense to have it in los angeles. >> has mr. lucas gone back to you? >> mr. garcetti is the best cheerleader we have. he is making a lot of progress. >> the administrative officer for los angeles, it is great to see you. >> thank you for having made. e. >> more details in just a moment. ♪

>> welcome back. ," live onottom line bbg television and streaming on your phone, tablet, and at bloomberg.com, now on apple tv and amazon fire tv.

you want to buy j.k. rowling's new book silkworm, you can. -- how manydelayed times? bookwill finally sell the even though they are in a fight with the publisher. sale,ore the book went on it was on pre-order for a month. website,et it on the and amazon was telling me what goes on sale can get it. you could go to walmart, or barnes & noble, and it was selling for less. the real story is that walmart, barnes & noble, and apple have been trying to take advantage of this boy that amazon has le

ft by not selling publisher books. it is selling 40% off all of these publisher books. analyst whog to an says it gives companies like ours and noble a do over. if you go to their books, it gives them a chance to promote other things to you. >> are the publishers close to a deal? >> no. thecan tell because thousands of other titles are not for sale on amazon. even if the books do go on sale

now, what winds up happening is that hurts pre-orders. and for authors, pre-orders are the holy grail of sales. sales or anarter of author come from b cells. the more you sell before the book comes out only elevate you on the best seller list and can help, but this will hurt. no one seems to know what's going to play out, but other contracts are coming up on the road. this might be an issue continually for the company. the issue is that e-book sales are becoming so important to publishers all across the board. 10% of revenue comes from e-book sales, and physical books might fall to $19.5 billion. hurt j.k.n't

rowling, because her book is out there and her name is out there. it depends on how much you get hurt on the pre-orders. >> thank you. what is expressed the hour, bloomberg television is on the markets. >> good afternoon. happy friday. check out the s&p market, they are happy as well. up on both the s&p and the dow. you have to go back to wednesday and the federal reserve. janet yellen might come clean this dropout of the market, she gave a pretty strong signal with where inflation was -- she was comfortable with where inflation was.

one stock we are keeping an eye on is ge. an allianceering with the french government for alstom. ♪

>> welcome back to the second half-hour of bottom line on bloomberg television. i'm mark crumpton. do government handouts hurt or help workers? that is the question at the in north an experiment carolina. >> imagine you're unemployed and can't find a job, just like a lot of people during the great recession. unemployment benefits are pretty much all keeping you going. but what if you still can't find a job after a couple of years and you are still getting

benefits? is it a real help to you or is you from getting any job you can? in july, north carolina slashed unemployment benefits by a third and cut the number of weeks people were eligible for benefits from 20--- 220 from 26. 0 from 26. the unemployment rate has fallen two percent and is just a tad higher than the national average. but the story hasn't changed. what happening is north carolina is creating a lot of jobs, 82,000 of them in the 10 months since. over the same time, the number of unemployed people fell. -- fewer people

entering the labor force pushes the number up a bit. tell us,oes this michael, about an unemployment check? is it more of a burden than a benefit? >> that is the question being asked nationwide and the answer is we still don't know. it intelligent economics or cruelty? a lot of people may have been forced to simply leave the state. we do know some people retired. certainly, some people were discouraged enough to leave the labor force. participation fell during that time. real question is does the firing continued to pick up as the economy does? that is already an issue in the contentious north carolina senate race. >> what are we hearing from economists? do they think workers are going

to come back? >> we need more evidence, but north carolina is continuing the experiment. areyou have to realize they now paying little more than subsistence in terms of benefits. the average rent for a three-bedroom apartment in charlotte is $900 a month. the question is, is north carolina's experiment going to ?e repeated across the country >> michael mckee keeping our focus on the economy and jobs. the u.s. conference of mayors began their annual meeting in dallas today. they are focused on economic output and the job market. mayor michael coleman of ofumbus ohio is the chair the conference of economy for the u.s. conference of mayors. thank you for joining me today.

>> before we get started on the report, you just heard about charlotte,ng on in north carolina. is that the something columbus is considering? there are two schools of thought, that you need to get people off unemployment because encourage them to find work but others say that there is a morale eddie issue at play. >> where was the program? >> in charlotte. >> they are attempting to take unemployment benefits from people, and they say that is pushing the unemployment rate down, but at some point, you have people leaving the area and trying to find work in other places. >> no, we have no intention of taking people's unemployment benefits from them. >> what is the unemployment rate in columbus right now?

>> we are at about 4.2%. we are a very different city than the rest of ohio. our unemployment rate has been much lower than the rest of the state. and strongverse economy and we have rebounded substantially from the recession areany years ago, and we doing well. frankly, the city of columbus is on the brink, we believe, of a renaissance in our city. per pairobal insight to forecast and it said metro economies will lead the -- prepare to forecast the said metro economies will lead the nation in the coming year. turning the corner right now. many of our cities are experiencing strong economic growth and the numbers are

looking good. the truth is in the cities around this nation, we represent employment, 90% of the gross national product. the cities of our nation are driving the economic recovery in our nation because that's where the economy is. we are very glad to see this happen. >> what type of expansion are you seeing in metro economies? which areas are performing well and which are still struggling? >> well, we want to see a stronger manufacturing base. that's a good thing. one of the things i think we have to look at is while unemployment is going down around the country, it is driven by the economic prospects of each of our cities that's driving the national prospects. one of the concerns i think we we have seen an

uptick in poverty. we have seen a widening in the gap between those who have and those who have not, and where there are successes, like in the city of columbus, we want to sharedre that success is through a broader group of people. saying --s highland how does housing tie into all of ? real estate, infrastructure improvements. >> housing plays a major part. we need more housing in our country to drive the economic rebound. real estate plays a critical role. we need more of it. jobs.d more technology but the key to all this is to ensure that there is strong education and we fill the skills gap in our communities.

>> the population growth in u.s. metro areas. is it a help or a hindrance to a city's economic development? on the one hand, you might see increased household formation, but on the other hand, you have property at a premium that might cause people to flee to the suburbs. --just be exact is happening just the exact opposite is happening in cities around the country. people are moving back to cities because that is where the vibrancy is taking place. that is where the economy is being driven. moving from the suburbs to the urban core doors of america. been an obvious trend over a number of years and it is getting stronger each year. cities all over the nation. the urban core is getting stronger. used to be a flight from the areas -- urban areas into

the suburbs. now we are seeing people come back because of opportunity, education, housing, quality of life that much more improved. is a greater economy and having more people in a space to deliver better services to our residents. coleman is the chair of the u.s. conference of mayors joining us from dallas. a pleasure to have you on the broadcast, thank you for your time. >> thank you. a pleasure to be here. up, beer goggles that make unappealing assets look attractive and what that could mean for your retirement money, next. ♪

>> it's time for today's latin america report. wall street banks say argentina is bluffing with a pledge to

walk away from talks with alien air -- with billionaire paul singer. the managing director says statements from government officials in boy nocera is casting doubt on the negotiations are just political posturing. casting doubt on the negotiations are just political posturing. argentina wants to restructure 100% of its debt and has asked for a solution. bondsction, argentine have posted the biggest gains in emerging markets. an issue payment on bonds was issued as part of restructuring in 2010. that is your latin american report for this friday. a day after fed chair janet yellen said there is evidence of

reach per year old behavior, investors responded by taking on sending junk bonds to a record low. how hungry are people? and should there be concern for systemic risk? >> that is a great question. janet yellen came out yesterday and said she did not see the risk elevating above a moderate risk. the question is, what is going to trigger a mastiff laois and in prices? what is going to trigger these junk bond prices to rapidly decline. >> it depends on your definition of moderate risk, right? >> it depends on a lot of things. risk has doubled in the last six or seven years. since the end of 2007, the volume of debt has risen $2 trillion.

this is a huge market. this is funding a lot of companies would not have easy ways to finance themselves that might not have a reason to exist otherwise. >> why should a person on main street care? >> most likely, they are invested in the debt through funds and cities public works systems. this is a market that is providing some return in a world of low yields. when the next refinancing cycle comes around, what can people expect to happen? >> that's a great question. the yield is at another record low. every day we see the charts drop lower and lower. the fear is, what happens if they goes up significantly?

triedappens if companies to refinance? where are yields going to be then? and do they have enough income to afford a higher rate? it's unclear. in the meantime, people are still investing in junk barns -- junk bonds because where else are they going to go? >> until rates rise. if interest rates rise, what happens then. the risk weee eight were talking about -- create the risk we were talking about? >> absolutely. if instruments start to yield more, why would you accept the risk of a junk bond when you could just go into treasury or an investment grade bond. the relative value now between investment grade bonds and junk bonds is shrinking. the yield gap is shrinking to the narrowest since 2007.

there is concern that people are -- getting comp they did getting compensated for the risk and they are it nor anger risk. -- and they are ignoring the risk. this is what the central banks wantedpeople to take -- people to take risks. they wanted people out of their safe zones and investing in the country. is it happening sufficiently? at this point in the cycle, is it beneficial to have yields this low? >> to be continued. lisa, thank you so much. up next, your biggest newsmakers of the week when we continue in a moment. ♪

>> it is friday so we bring you encore, a look back at the most

notable newsmakers of this week. >> iraq has beneficiary of sunni-shiite positions -- divisions for a very long time and it is not surprising that is the reps again and this has been the pattern in iraq. our invasion, the whole balance has been disrupted. >> if we look at household formation, the vast majority of households are renters. and if we look at the younger generation, the so-called echo boomers/millenial's, they have a higher propensity to rent. the magnitude of that demographic is very large. with many of these young potential borrowers very much inclined to continue to rent, we are going to see this trend for a long time. >> yields have compressed to the point where they are at an

all-time low, pre-recession lows for initial yields. investors are looking for alternatives where they can get higher returns. student housing is one, senior housing is another. there is a little more risk in that play, but the return potential is something investors find interesting. >> the challenge with the is thec environment federal reserve could go either way. >> most measures of growth are relatively subdued right now. inflation is creeping up with the greater the and two percent print on the cpi just this week. leeway.es policymakers i think the stimulus brick remains on the pedal at this point. >> on looks back at the notable newsmakers this week. stay with us, another chapter

after the break.

>> get the latest headlines at the top of the hour on bloomberg radio and streaming at bloomberg.com. that does it for this edition of bottom line. have a wonderful weekend. i will see you monday on the markets. is 56 minutes past the hour

which means bloomberg television is on the markets. i am jonathan ferro. check this out. we have another day of gain for you. 500 at a record high. also a record high on the dow jones. nasdaq slightly higher as well. is going to tolerate higher inflation, at least that is the view for now. etf friday. companies have been increasing their buyback expenditures by 59% in the past 12 months. that's according to s&p. at the same time, etf's have seen access quadrupled from $800 million to $3.3 billion. to play this ways market. let's start big picture. what has been behind this massive buyback program, almost

across regions, across markets? >> we have the stock market going up, fed induced. companies have two ways to return a value to shareholders. they can issue a dividend or issue a buyback. what we have seen in the etf space is this niche area has been overshadowed by the dividend etf. it has quadrupled in the past year. >> give me some names. how do we play this going forward? >> piquet w looks at the universe of u.s. stocks and looks for companies that have reduced their net shares outstanding by at least five percent in the past 12 months. that is pretty strict, but it 100 companies. oracles of the top. it's pretty diverse. the only caveat is it only reconstitutes every year. so, for example, apple had a big buyback. that won't make it here until

next january. >> a terrific run-up when we look at the chart. the question is, is this just ?.s. companies if i want more international exposure, where can i get that? >> it's a great point because this one only has 41 stocks that meet that criteria. the buybacks have been mostly in the u.s. the international etf is only a few months old. issued because the first one was such a big hit. in the u.s., there is a trim tabs float shrink etf area this has a different approach. it ranks all of the stocks and looks at whether the buybacks came from free clash flow -- free cash flow or issuing debt. a little more, and sort of an unsung way to play it. seen these charts and

they are quite remarkable. the question i know no one wants to answer is can we expect this to continue? >> i have the same feeling as -- can we expect the stock market to keep going up? he keeps going up in the fed is behind it. i think when you have the fed in your corner in talks to the stock market in general. these are going to sort of ride that wave. intoll kind of be woven how you feel about the fed in the stock market in general. but these are a way to capture the buyback factor. >> there it is. you heard it from eric. the optimism for etf's. as optimistic as the market in general. record highs. we will be back shortly. ♪

>> keep your eyes on to round numbers. dow, 17,000, s&p 500, 5000. we are within striking distance of both. i am trish regan. street mart starts now. welcome everyone to the most important power of the session. 60 minutes to go until the closing bell. reports that apple is developing multiple versions of sm